The Incredible Shrinking NAFTA Trade Deficit

Yup — it’s true. Believe it or not, our manufactured goods deficit with NAFTA and the other U.S. free trade partners is shrinking. And not just a little, either. The manufacturing deficit with those countries has shrunk an impressive 25%. (Lou Dobbs, are you listening….?) The countries with which we have free trade agreements – NAFTA (Canada and Mexico), Australia, Chile, Israel, Jordan, and Singapore – account for 43% or our manufactured goods exports, and only 6% of our deficit. Bet you didn’t know that.

But now that you know, you understand why the NAM is such a big fan of free trade agreements. U.S. tariffs (taxes on imports) average only 3%, while the average for the rest of the world is 30%. So if we go from 3% to zero, and they go from 30% to zero, it makes sense that we would gain a lot of exports. That’s what is happening, and that’s why we want more trade agreements. Trade agreement lower barriers to entry to US-made goods, not the other way around. When we export, we create more jobs here and strengthen manufacturing right here at home.